How Does Square Work? The Beginner’s Guide To Square For Small Business

There’s a lot that small businesses want to know about Square and how it can make it easy to process their mobile payments. Square can be many things to many different types of businesses, but at its core, it is a solution to help businesses manage how they process payments from transactions both online and in-person. In this post, we’ll answer all of your most basic questions about Square, including how Square works. We’ll also tell you everything you need to know about using Square for small business.

What Is Square?

Going one level deeper, think of Square as a credit card processing service that makes it easy for businesses to start taking card and mobile payments. Merchants can use Square to accept mobile credit card payments from their customers and create a seamless selling process from anywhere. Square’s services also include point of sale, inventory, and employee management.

Although it started as a swipe-based mobile payment processing system, Square’s other services scale with small businesses to help them expand their physical and eCommerce brand identities. Products like Square Register and Square Point of Sale, for example, have given Square quite a lot of staying power.

Take a look at what’s keeping Square successful and how it helps small businesses connect their customers in more ways than just one.

A Square By Any Other Name: What Is Squareup?

Referring to Square by just the name “Square” can get confusing. That’s because Square’s bread and butter is in its wide selection of products that serve different types and sizes of business. Square, formerly Squareup, still uses its original name in the current URL, squareup.com, to sell its different services.

Get To Know Square’s Business Model: Quick & Convenient

Card payments for the goods and services customers purchase from retailers temporarily go into merchant accounts for deposit. At least, that’s what happens when businesses use traditional merchant accounts.

Square pools all of its subscribing users’ accounts into one, big merchant account, which makes it a third-party payment processor. With Square, businesses don’t need to wait for banks to process fees on deposited funds while the merchant account provider holds onto them.

How Much Does It Cost To Use Square?

Square’s rates at a glance vary by the type of transactions businesses are processing. Without breaking out a calculator and crunching numbers, businesses can expect to pay from one of these four rates with Square:

• 2.5% + $0.10
• 2.6% + $0.10
• 2.9% + $0.30
• 2.5% + $0.15

Per-transaction rates and fees aren’t exactly attractive all on their own to small businesses. Square promises no monthly fees, statement fees, or minimums to help growing businesses remain flexible with the payment processing solutions they choose to use at any given time.

What Does Square Do? A Quick Guide To Square Services

Square has become much more than just the swipe-based smartphone processing system that it started as when it launched in 2009. Since then, the Square business model has evolved, and features like a robust mobile POS app, payroll, inventory and employee management, online store, and email marketing have all come together under Square’s umbrella of business-centric services. A true all-in-one service like that may sound too good to be true, but if you’re wondering “is Square legit?” the answer is yes. Some features are basic, but Square really tries to offer everything a business might need.

There’s a lot to cover when it comes to Square services. In general, though, the below list introduces the product’s most core features:

• Credit Card & Payment Processing: Square’s credit card processing is a feature-rich, if advanced, solution, for small businesses that need on-the-go payment processing. With Square, businesses have access to both POS and eCommerce processing that comes with predictable pricing.
• Square POS: The free point of sale (POS) mobile app known as Square Point of Sale works for multiple business types. Since every business has a different eCommerce presence, number of physical locations, and industry specialization, Square’s POS app is versatile enough to integrate with just about every kind of small business imaginable. The POS mobile app is ideal for businesses that need affordable credit card processing rates with a powerful, flexible POS system
• Business Management Software & Tools: Square offers business management tools for small businesses that need to keep regular track of daily reporting and POS payments. Business management support and services include payroll tracking software, employee scheduling, and custom website and invoice creation with tools such as Square Online Store and Square Invoices.
• Business Loans & Funding: Small businesses that need loans or financial funding can use Square Capital to keep money moving as they continue to grow. Square Capital tailors the loans it provides to each business, so that business owners have money in their account when they need it and don’t need to struggle with long and complicated applications and signup fees.
• Square Online: There’s no way around the fact that businesses now need to sell their products and services in more ways than one. The Square Online store lets any type of business quickly start selling and shipping online orders to customers with no monthly fee. With Square Online, businesses can also establish an eCommerce presence by creating and selling through their own web store, without having to ever learn how to code.
• Square Appointments: Appointments-based businesses such as field service companies can benefit from a POS system that lets them manage online booking with integrated payments. With Square Appointments, appointment-based businesses can give their customers easy-to-use booking tools that display service pricing information and let them make appointment requests that they can accept manually or automatically.
• Square Loyalty: Users can create digital rewards programs that their repeat customers can use. The Square Loyalty system is mobile-friendly, which means that businesses can easily promote to their website users rewards programs that support both cash and card payment transactions.
• Square Marketing: The Square dashboard intuitively supports an overview of a business’s marketing efforts and how they’re affecting the bottom line. Square’s email marketing software allows small businesses to set up automated email campaigns and stay connected with their customers through text message marketing. Square’s text message marketing system integrates with Square POS and displays its marketing results for businesses to review in the dashboard.

For small business owners who still hesitate to start processing funds with a third-party provider, Square makes its sign up process much easier and quicker compared to that of typical merchant account providers.

What Is A Square Account & How Do You Get One?

It can feel like a big decision to become a merchant with Square in lieu of subscribing to a traditional merchant account provider. Thankfully, the process to get on board with a provider like Square is less daunting.

Small business owners who are ready to use Square to process payments can get started by providing a minimal amount of personal info and zero bank statements or proof of revenue. The free POS app and mag stripe mobile credit card reader come ready for use after a business creates a new account.

Square makes it easy for businesses to add paid services to their accounts through the Square Online Store. Businesses can manage their paid service subscriptions, which require payment methods such as credit cards, through their Square Online account settings.

Read more about how to set up a Square account.

How To Use Square To Run Your Business

How does Square work for small businesses? It’s pretty simple, actually. Square’s original concept of easy, basic mobile card payment processing has allowed it to become many things to many kinds of businesses. The quick signup process, transparent payment processing rates, and free POS app all help small businesses quickly set up a full-fledged in-person or eCommerce presence.

Square sets itself apart from other third-party processors like PayPal by helping small businesses coordinate everything from POS to email marketing, eCommerce, and more, so that they can accelerate their digital growth in a time where the point of sale may not be in the same place that customers receive their service.

The COVID pandemic has forced many businesses to accept the fact that they need a hybrid payment processing solution that has both eCommerce and brick-and-mortar touchpoints, so that customers can browse and shop for products from wherever is most convenient. It no longer makes sense for businesses to provide only physical locations at which their customers can find what they’re looking for.

Online purchases with in-store pickups represent merely the tip of the iceberg when it comes to hybrid payment processing with Square:

• Retailers with a high volume of inventory can benefit greatly from solutions that let their customers shop for products outside of in-store locations. Custom website and invoice creation with tools like Square Online can help retail stores quickly create online shops that have checkout capabilities and still allow for in-store pickups.
• Businesses in the food and restaurant industry now need fast, mobile-friendly ways for customers to conveniently pick up their food that don’t force them to eat at a physical location. Thankfully, even businesses that previously had no online presence can quickly create one with tools such as Square for Restaurants, Square’s POS system that lets food and restaurant customers focus on front or back of house payment processing, depending on how they’re currently operating their business and whether they’re serving food to customers in-house or only doing delivery and pickup orders.
• Appointments-based and field service companies can provide a larger incentive for their customers to book appointments by allowing them to do it both at their front desk or through a mobile device on the go. Square provides an all-in-one appointments-booking system, aptly named Square Appointments, to let businesses handle appointment-booking online and transaction-making in-person.
• Micromerchants that rely on mobile-focused payment processing are able to let customers make pre-orders with Square Online, eliminating problems they’ve previously faced with processing payments with credit cards. Square’s website creation tools can create a must-have eCommerce presence for micromerchants like pop-up shops and farmers markets, who need to stay connected with customers and encourage pre-paid purchases for their upcoming product promotions.

Small businesses with few resources may struggle to manage the different payment methods used for in-person and online transactions without a platform that accounts for every single purchase. Square’s dashboard brings everything together to highlight the payment processing touchpoints that are bringing in the most revenue.

There’s a lot to love about Square. But it’s time to talk about a few of the drawbacks. Take a look at this quick list of advantages and disadvantages businesses face when they use Square POS and its free and paid services:

Advantages To Using Square

By now it should be clear that Square provides a convenient central platform for small businesses to manage their operations. A brief rundown of the biggest advantages to using Square includes:

1. It is a free POS solution that allows businesses to manage transactions of multiple types without having to wait for a bank to process and withdraw its fees. Square Point of Sale is a household name in mobile card payment processing and is a reliable solution that instantly integrates with businesses’ payment processing solutions without stacking on fees or hidden contract clauses.
2. Hybrid payment processing makes it simpler for up-and-coming businesses to let customers browse online and pay in person. Square accommodates merchants in niche industries, online retailers, and micro-merchants who need payment processing solutions that don’t interrupt their customers’ purchasing experience.
3. Square boasts transparent and uncomplicated pricing that has no monthly fees or statements attached. One of Square’s biggest draws is its pricing structure, one that stands in stark contrast to the typical sign-up and application processes that traditional merchant providers require.

Disadvantages To Using Square

Square is imperfect, just as any other payment processing solution is. The biggest disadvantages to keep in mind when it comes to using Square include:

1. Lost or incomplete sales can occur with keyed-in credit card processing attempts that get rejected. Businesses run the risk of losing out on funds that never get successfully processed by Square, which is an implicit disadvantage to using any third-party processor.
2. New users face limited features and options with the free plan. Some small businesses may need specialized payment processing solutions, and for many higher functions, Square requires a paid subscription.
3. Indefinite funding holds and even terminations are a possibility for businesses that decide to use Square. Although the risk of this occurring is small, Square, like most other third-party processors, is able to investigate, freeze, and terminate the funds they process as they see fit. It’s most likely for higher-volume merchants to experience issues with funding holds and investigations; these businesses may want to consider other, more premium payment processing solutions instead.

Should You Switch To Square?

Square offers merchants a value that’s hard to beat, especially considering the fact that it’s a third-party processor that lets businesses start using it for free. A wide range of services allow small businesses to be as flexible as they need to be when accepting online and in-person transactions, which is why it’s no wonder Square has thrived on more than just its reputation for reliable mobile card payment processing.

When it comes to use-of-use, affordable pricing, and a feature set that makes it simpler to create an eCommerce presence, Square is pretty tough to beat. Square may not be the right solution for businesses of all types and sizes, especially larger ones that may need a more advanced portfolio of service and pricing tiers, but it provides enough support to make it stand head and shoulders above the competition.